asked Her Majesty’s Government:

Whether they have undertaken any cost-benefit analysis of the role of the sub post office in today’s society.

My Lords, Her Majesty’s Government’s proposals to sustain a nationwide network of post offices, announced on 14 December 2006, draw on a wealth of advice and research from organisations such as Postcomm, Postwatch and the National Federation of SubPostmasters. In developing these proposals, we are satisfied that the case in support of the social role of post offices has been made.

My Lords, is the Minister aware that when I went into my sub post office in Potton, Bedfordshire, this morning, the couple who run it so well asked why they were not allowed to do international money transfers, why they could validate a passport but not a driving licence, why they could not have the link facility for the whole Royal Bank of Scotland Group, why TV licences had been taken away from them and why in today’s world pensioners could not get their pension in cash? Would it not help in running a viable sub post office network if some of those restrictions were removed so that they could compete on level terms with the banking fraternity?

My Lords, Post Office Ltd maintains trading restrictions in sub postmaster contracts because it believes it is essential for the survival of the network. Restrictions cover certain key products and services that generate income for the network. The company needs to preserve the ability to negotiate new business on behalf of the full network. Allowing potential suppliers to cherry-pick branches in which to sell their products would make it impossible for Post Office Ltd to negotiate agreements for all branches. The noble Lord mentioned TV licences. The BBC took that decision on cost grounds. The Post Office has to ensure that it remains competitive at all times.

My Lords, does the Minister accept that those can only be crocodile tears for the Post Office from a Conservative Party which, during its last Government, presided over 3,500 post office closures and more than £2 billion being siphoned off from the Post Office network for the benefit of the Treasury, which could have been invested in the furtherance of the network? Does he also accept that his Government do not have entirely clean hands, as 4,000 post office branches have closed since Labour came to power in 1997, during which period we have seen the phasing out of facilities that post offices provided, as the noble Lord, Lord Naseby, described? Will the Minister confirm that, at the end of the consultation period in March 2007, this Government will maintain the sub post office network at a level that will preserve the social role of post offices in our towns and villages?

My Lords, I am grateful to the noble Lord. I certainly agree with him on the former point but not on the latter. The Government have invested something like £2 billion in the Post Office network since 1999 and we are committed to investing another £1.7 billion up to 2011. Of the 14,300 odd branches, only about 4,000 are commercially viable. The 800 smallest post offices receive, on average, 16 customers a week, with a loss of £17 per visit. That position is not sustainable. Current losses run at about £4 million a week, so we need to make changes, but we also need to ensure that we retain the social Post Office network. The Government are committed to doing that.

My Lords, if the Post Office does not win the contract for the Post Office card account, it is possible that pensioners will have to pick up their money from PayPoint outlets, which is inconvenient and possibly dangerous. That would lead to a further loss of business for the Post Office network. What assessment have the Government made of further post office closures if that happens?

My Lords, on POCA, we are committed to a replacement product available on the same basis as now; it will be introduced from 2010. The Government feel that the Post Office is well placed to bid for the contract, but as the noble Baroness knows full well, we have to abide by EU regulations which require that that goes out to tender.

My Lords, is the Minister aware of the developing use of community buildings, including churches, in providing Post Office services, as in Sheepy Magna in Leicestershire? What way does he see of encouraging such developments in the interests of community cohesion?

My Lords, I am grateful to the right reverend Prelate for his intervention. The Government will be setting up at least 500 outreach outlets, which will serve small communities along the lines that he suggests, including mobile post offices and services in village halls, community centres and pubs. I think that we can build on that.

My Lords, has my noble friend noticed that noble Lords opposite have been arguing for more money for waterways—

Reading.

My Lords, I am very good at reading as well. They have been arguing for more money for waterways, for museums and galleries and for post offices. At the same time, Mr David Cameron and Mr George Osborne seek to cut the budget of the Government by £21 billion. Does my noble friend not discern some contradiction in those two positions?

My Lords, I agree with my noble friend. I think I will leave it at that.

My Lords, the Government propose to introduce 69 personal interview offices for first-time applicants for passports. Have they thought it through to see how that will again undermine our post offices?

My Lords, the way people buy goods and services is changing. A lot of people, for example, now buy their driving licence online; a lot of people pay by direct debit; the vast majority of pensioners now receive their pensions directly into bank accounts; and people increasingly use the internet. We have to recognise that the Post Office needs to change with the times as well.